BERN, SWITZERLAND – Ireland and Switzerland have agreed to a double taxation treaty, subject to the agreement of both countries’ parliaments, that will limit withholding tax to no more than 15 percent on gross dividend amounts. A crucial detail welcomed by the cantons and business associations, according to Bern, is that “there will be no withholding taxes on dividends paid to the national banks of the two countries or to pension funds.”
The agreement Wednesday 23 May is part of a new double taxation treaty, the latest in a series negotiated with other countries to ensure that Switzerland is in line with OECD provisions on the exchange of information.
The Irish agreement also states, says Bern, that “If, however, a company holds a stake of at least 10% in the capital of the distributing company, the dividends will be exempt from withholding tax.
ZURICH, SWITZERLAND – The Swiss National Bank (SNB) showed a first quarter loss of CHF1.7 billion, central bank figures released Monday 30 April show. The SNB had a loss of CHF 2.6 billion due to exchange rate losses, offset in part by a gain of CHF0.8b in the value of gold holdings and a gain of CHF14 million on Swiss franc positions.
Quarterly figures provide only provisional information about annual results, the bank cautions, since strong fluctuations are normal. The bank’s results depend on gold, foreign currency and capital markets.
The continuing strong Swiss franc played a significant role in results, the bank reports.
“In the first quarter of the year, the Swiss franc appreciated against the major investment currencies, with the Japanese yen depreciating by 9.6%, the US dollar by 3.8% (to CHF 0.9020 Swiss francs to the dollar) and the euro by 1.1% (to 1.2043 francs to the euro). At CHF 6.4 billion, the exchange rate losses weighed on the consolidated result, and were only partly offset by price gains and interest income.”
Switzerland's option to keep quotas until 2014 in case of excessive immigration was written into 2004 agreement
BERN, SWITZERLAND – Reactions were swift and negative from a number of European Union leaders to Switzerland’s decision to revive quotas for the EU-8 States, announced 18 April.
Their objection doesn’t question Switzerland’s right to extend its transition period for handling immigration beyond 2011, but focuses rather on Switzerland’s treatment of the group separately from the rest of the European Union, with at least one European parliamentarian saying that the move runs counter to the spirit of EU-Swiss agreement on the free movement of people. The agreement in fact built in this option for the Swiss.
That decision revives old negotiated deals dating back several years, covering how Swiss-EU bilateral agreements would handle an enlarged group of European States, a spokesperson for the ministry for the economy has told GenevaLunch.
The two sides had failed, by early2004, to reach an agreement after nine negotiating sessions that began in 2003. The European Union wanted the 10 new members to be added to negotiations already underway and Switzerland said no.
The compromise solution reached at their sixth session allowed for options based on different economic scenarios, notably giving Switzerland the right, in case of a clearly defined case of “excessive immigration” to revive quotas for eight of the 10 new countries, with Romania and Bulgaria handled separately. Switzerland, under the terms of the agreement, also has the right to ask for salary information and ensure that labour laws are respected.
A bumpy ride to Zurich was due to pilot fatigue
ZURICH, SWITZERLAND - A January 2011 flight that landed seven Air Canada passengers in hospital in Zurich was initially declared to be due to turbulence, but Canada’s Transportation Safety Board has found otherwise.
The government body issued a report Monday 16 April that says Air Canada flight 878 from Toronto to Zurich 13 January of last year had a 46-second “pitch excursion” due to pilot fatigue.
The plane’s first officer took a nap, with the captain’s permission, but when he awoke he confused Venus an a US military plane flying in the area. Soon after he took action to avoid the plane, as he saw it, and the result, in official terms, was “an altitude deviation of minus 400 feet to plus 400 feet from the assigned altitude of 35 000 feet above sea level. Fourteen passengers and 2 flight attendants were injured.”
The accident, analyzed at length in the CTSB’s report, draws attention to the issue of airline pilot fatigue. The report notes that:
“Night flights from North America to Europe have an inherent risk of fatigue for North American–based pilots. Most of these pilots fly a small number of night–time legs per month and revert to sleeping at night when not working. The circadian system of pilots who fly only a small number of night–time legs will not adapt to working at night, and these pilots are likely to display performance decrements during the night–time legs in spite of any countermeasures.
“To counter fatigue, some pilots will try to nap before a night–time leg. While this can be helpful in some cases, it cannot prevent fatigue in all pilots. Moreover, it is not always possible to obtain an adequate amount of good quality sleep during the day 9 and, coupled with a small number of night–time legs, performance decrements will persist.
“In addition, these types of flights are characterized by long periods of darkness with few operational demands while mid–Atlantic, creating inherently soporific conditions. It is not until the flight approaches the coast of Europe at dawn that pilots experience reduced sleepiness as the daylight and circadian rhythms start to alleviate some of the fatigue. Nonetheless, the high workload requirements of approach and landing have to be borne at a time when there is a significant risk of pilot fatigue.”
BERN, SWITZERLAND – Switzerland and its neighbour Austria Friday 13 April signed an agreement calling for Swiss banks to withhold tax on income from offshore accounts held by Austrian citizens. The account holders will then have to decide to either forfeit the tax or declare the accounts. The agreement is similar to those signed by Germany and the UK and, like those, opens up the Austrian financial services market to Swiss companies.
A flat-rate one-off payment “for regularizing the past” is 15-38 percent depending on the size of the assets and how long the client has had the banking relationship. A single rate of 25 percent will apply for future investment income taxation, which Bern explains corresponds to Austria’s capital gains tax. Austria has no inheritance tax, so this is not an issue.
Bern’s statement Friday afternoon states bluntly that Switzerland “does not want any further untaxed assets in the future”. It noted that “both sides acknowledge that the agreed system will have a long-term impact that is equivalent to the automatic exchange of information in the area of capital income.”
It outlined how the deal will work:
“Under this agreement, persons resident in Austria can retrospectively tax their existing banking relationships in Switzerland either by making a one-off tax payment or by disclosing their accounts. Future investment income of Austrian bank clients in Switzerland will be subject to a withholding tax, and the proceeds of this will be transferred anonymously to the Austrian authorities by Switzerland. In addition, mutual market access for financial services will be improved. The agreement requires the approval of parliament in both countries, and should enter into force at the start of 2013.”
Media charges of tense relations over tax issues denied by both governments
German political world, media reactions mixed
BERN, SWITZERLAND – German and Switzerland signed a “Supplemental Protocol” to their September 2011 tax agreement, Thursday 5 April. Bern issued a statement noting that “The essence of the agreement remains unchanged, that the taxation of German capital assets in Switzerland is ensured for the present and the future and thereby places relations between Switzerland and Germany on a forward-looking basis.” The new protocol and agreement are now ready for the countries parliaments to review.
The German government, like the Swiss government earlier in the week, denied press stories that relations are strained over another tax issue, arrest warrants issued by canton Zurich’s attorney general for three German tax collectors, linked to data that was stolen from a Swiss bank in 2008.
But in Germany, the political left reacted negatively while the media reaction was “more nuanced”, reports Swiss public broadcasting, adding that there is little likelihood yet more concessions on the part of Switzerland would muster support here.
The details of the new agreement, as listed in the Swiss statement, are likely to prove interesting to other governments looking for ways to force their citizens to declare tax money they have hidden in Switzerland:
- “After the agreement has come into force, inheritances which occur will be covered. In the case of inheritance, heirs must consent either to collection of a 50% tax or disclosure.
- “In the case of flat-rate taxation of the past, the size of the tax burden has been increased. Instead of being between 19% and 34% as it was up to now, the tax rate is now at least 21% and no more than 41%.
- “In addition the number of possible requests for information after entry into force of the agreement have been increased from a maximum of 999 to a maximum of 1,300 within a period of two years. This option extends and supplements the exchange of information according to the OECD minimum standard.
- “With the entry into force of the agreement on 1 January 2013, German taxpayers will no longer be able to shift assets out of Switzerland to third countries without notification. The appointed deadline was brought forward from 31 May 2013 to 1 January 2103.
- “It was made clear that interest payments which are covered by the Taxation of Savings Income Agreement with the European Union or will be covered by this in future, will be excluded from the scope of the agreement. In this way, the concerns of the EU Commission regarding compatibility with EU law have been removed as was the case with the tax agreement between Switzerland and the UK.
- “The regulations on the distribution in Germany of the revenue generated will be taken from the tax agreement. Within the scope of a German legislative procedure concerning the one-off flat-rate tax payment a higher proportion of the German Länder and communes will receive payment than would have resulted from the distribution key in the case of tax on investment income.
- “Individual models which come under the anti-abuse provision will now be described. In addition, monitoring implementation of the agreement by the competent Swiss authority and by an independent auditing company and the appointment of German Länder representatives on the so-called joint commission has been specifically laid down.”
Swiss taxi waiting for customer - Photo courtesy of TaxiSwiss
GENEVA, SWITZERLAND – Swiss cantons and communes should allow greater competition among taxi services, says Comco, the Swiss Competition Commission. Services from other areas should be given more freedom, in particular the commission says.
Local authorities in several major Swiss cities are not applying federal competition regulations, says Comco, citing the federal Internal Markets Law, when it comes to allowing out-of -area taxis to work within their communes. Comco’s report, issued last week, is based on research into taxi services in Basel, Zurich and Bern.
The report recommends that authorities issue operating concessions (licenses) to taxis from other localities and that they open parking areas for taxis to all cab operators without discrimination.
A recent German study shows cab fares in Swiss cities to be much pricier than those in Germany and Austria.
Dark Swiss chocolate, not just good but good for getting the stress level down (photo: E Wallace)
LAUSANNE, SWITZERLAND – We’ve all suspected it and now Nestlé researchers tell us it is true: a nibble of dark chocolate a day reduces our stress level. A research team that looked at the biochemical basis for what many of us like to consider comfort food found “strong evidence that a daily consumption of 40 g of dark chocolate during a period of 2 weeks is sufficient to modify the metabolism of free living and healthy human subjects, as per variation of both host and gut microbial metabolism.”
Their findings, presented at a conference in California 28 March, showed “that the chemical compounds contained in dark chocolate may improve the disposition of people who experience higher levels of stress.”
You might have to use more diplomacy now that the word is out when you offer chocolates to your stressed mother or others. Remind them that the group also found that “the level of stress-related hormones reduced in all participants, including those who were not assessed as stressed at the start.”
The test group consumed half the chocolate in the morning and the other half in the afternoon.
In more scientific terms, the group’s abstract reports this:
“A clinical trial was performed on a population of 30 human subjects, who were classified in low and high anxiety traits using validated psychological questionnaires. Biological fluids (urine and blood plasma) were collected during 3 test days at the beginning, midtime and at the end of a 2 week study. NMR and MS-based metabonomics were employed to study global changes in metabolism due to the chocolate consumption. Human subjects with higher anxiety trait showed a distinct metabolic profile indicative of a different energy homeostasis (lactate, citrate, succinate, trans-aconitate, urea, proline), hormonal metabolism (adrenaline, DOPA, 3-methoxy-tyrosine) and gut microbial activity (methylamines, p-cresol sulfate, hippurate). Dark chocolate reduced the urinary excretion of the stress hormone cortisol and catecholamines and partially normalized stress-related differences in energy metabolism (glycine, citrate, trans-aconitate, proline, β-alanine) and gut microbial activities (hippurate and p-cresol sulfate).”
GENEVA / ZURICH, SWITZERLAND – Airline Swiss announced Tuesday 27 March that it will be increasing long haul flight fares 2 April, by CHF10-30 in economy class and CHF50-100 in business, for flights from Switzerland.
Changes in the market account for the price hikes, says the company, which notes that first class fares and special offers are not affected.
EasyJet confirmed Monday that it will begin a trial of allocating seats on five lines, possibly including Geneva, in April. The plan was announced last December, but losses in the airline industry have put some plans on hold.
Credit Suisse reported to be asking Americans for tax advisors’ names, proof of filing in the US
Swiss flag, more portable than a bank account
BERN, SWITZERLAND – The Council of the Swiss Abroad (CSE) is demanding that the government and Swiss banks find a reasonable solution to the growing banking problems of Swiss citizens who live outside the country, particularly those in the US.
The move by the group that represents the 700,000 Swiss who live abroad, about 10 percent of the total population, comes as Aarguer Zeitung, a Zurich area newspaper, reports that Credit Suisse has sent out some 4,000 letters asking American clients to sign by 23 April that they have filed their 2010 US taxes and asking for the names of their tax advisors.
The newspaper quotes a bank official as saying the request is not linked to new demands by the US but is a precautionary move by the bank. Credit Suisse has been under investigation by the US Justice Department for helping wealthy Americans avoid taxes by hiding their money. The bank is widely thought to have given bank data on about 130 clients to the US early this year.
Two sides of a rough coin
Swiss citizens who live or have lived in the US are finding themselves in an uncomfortable seat that closely resembles that of many Americans in Switzerland. Swiss banks are increasingly turning them down their own citizens as clients, including people who have been with the banks for a number of years and use their Swiss bank accounts to pay mortgages on homes back in Switzerland, for example.
Home away from home, but where's the bank for the mortgage payments?
The cost to a Swiss person of doing regular foreign banking from the US is prohibitive. The same is true for Americans living in Switzerland who try to do regular Swiss banking through a US-based bank, assuming they are allowed to maintain an account. A Swiss person who takes the desperate measure of keeping quiet about a Swiss account by, for example, using a Swiss address, risks getting the client in trouble with the Swiss bank, not to mention tax authorities.
US citizens in Switzerland have been faced with similar tax and banking dilemmas thanks to the rising cost to Swiss banks of showing they are compliant with American laws covering US taxpayers.
UBS in 2008 and now Credit Suisse have been investigated by the US for helpingAmerican citizens resident in the US to hide money in their offshore Swiss accounts.
But even US citizens who live in Switzerland and pay taxes here have been caught by the fallout from the offshore legal battles as banks move to avoid further legal hassles.
At a recent meeting in Geneva of American Citizens Abroad, half of the people in the room, 90 or so, raised their hands when asked if they have had bank accounts closed or been refused bank services recently because of their US nationality.
Greencard holders not spared, new US Supreme Court decision implies
Swiss or other non-US persons who spend more than four months in the US are considered residents and thus liable to US taxes, as are greencard holders.
A 21 February US Supreme Court decision makes it clear that US green card holders who withhold information about bank accounts outside the country risk deportation and face a possible and potentially costly exit tax, tax experts at the Venable Tax Group wrote last week.
Getting a real Lift, 22-24 February
by Ellen Wallace
JP Rangaswami presenting at Lift 2012 (photo, Ivo Naepflin for Lift)
GENEVA, SWITZERLAND – The number of conversations in Geneva centred around our digital lives, past, present and future, is up this week thanks to the annual Lift Conference, which opened Wednesday 22 February and ends Friday.
The conference itself pulls in several hundred people from the worlds of business, academia and international organizations, with presentations that address geek concerns and broader philosophical questions
Devices and domesticity, potentially uncomfortable bedfellows
One of my favourites on the opening day schedule was Victoria Broadbent of UCL in London asking if our individual personalized digital devices are destroying our Victorian myths of domesticity, a great example of how good speakers ask the question we’ve had all along without being aware of it.
She pointed to the changing use and design of space in the home, with more integrated and less specialized rooms. Downton Abbey staff and family would have been very puzzled by today’s lofts, not to mention the devices they would find there. “Homes have become relational spaces in which the main activities support the social cohesion of the household. The arrival of personal digital devices in this context is disturbing.”
So that’s what’s going on at home.
The mental twinning of urban space and books that behave like cities
Those of us trying to grasp or imagine the book of tomorrow that is part of the electronic world are offered a Thursday afternoon workshop that talks about “technology driven visions in the effervescent book industry”. This is an elegant description for an industry that is wildly turbulent, not always for the better, and which has authors and publishers scrambling to understand the impact of technology on content and its creation.
Frederic Kaplan and Laurent Bolli, from bookapp.com, the workshop leaders, leave chapter headings in their wake as they take us through a world where books have signage, dedicated neighbourhoods and urban services such as guides and tours.
Outside the conference: more conversations
Hugh Quennec, Geneva Servette Hockey Club
The scores of talks at the conference give speakers and people attending a chance to meet with other groups. I attended a workshop nearby on how to better use videos at work, offered by So Money, a local video production agency, and 23 Video, who have worked with Lift and who are in town from Denmark in part to kick off their new partnership with So Money.
On display was 23 Video‘s answer to what they call the “last orphan child of the web”, video – you can easily create and manage other online content through your own web sites and photos sites but affordable video sites that you can make your own are a new idea. The company offers a video management solution for a fixed monthly fee of $675 that gives unlimited uploads, downloads, user numbers, works with all platforms, distribution options through all channels and a rich set of analytics tools.
Hugh Quennec, part-owner of the Geneva Servette Hockey Club and Olivier Riethauser, communications and community relations manager at the club, talked about their success in using video to create a sense of community that goes well beyond the hockey rink.
My own notes from the workshop included these tips to move beyond boring corporate videos: Know your target audience, offer a helping hand, get them to leave a trace. Content is not about selling: it’s about entertaining. That said, great content provides solutions to real-world problems and it must be worthy of attention and immediately useful to the audience. Don’t preach, though: content is about the conversation.
In fact, just about everything digital is about conversation, and Lift is about joining the talk.
BERN, SWITZERLAND – The Swiss government announced the first phase of a strategy “for a credible, tax-compliant and competitive Swiss financial centre” Wednesday 22 February. The statement for the first time puts the emphasis on future offshore clients stating they are tax-compliant at home before an account will be opened.
The Federal Council says it has asked the Federal Finance Department to draw up the details of the strategy and it expects to announce a series of concrete steps by September 2012. Today’s statement provides an outline of what is to come.
The first step must be to settle past tax problems, says Bern, “in particular cases of clients living abroad whose assets have not been correctly taxed.” Existing clients’ assets will have to be “regularized” from a “tax viewpoint, thereby lowering the legal risks for banks”.
This will be followed by a three-prong programme that focuses on international cooperation and future taxation of investment income and capital gains for offshore accounts:
- International withholding tax agreements, beyond those negotiated with Germany and the UK: Bern calls this “an effective means of taxing taxpayers in accordance with the regulations of their country of domicile while safeguarding their privacy”. It notes that some issues “have not yet been fully resolved, [but] there is international interest in this approach”.
- Improved administrative and mutual assistance based on international standards as laid out in double taxation agreements (DTAs). Serious tax crimes and money laundering investigations will be more closely linked, but the key part of this will be the new Tax Administrative Assistance Act, out for public consultation until April. It replaces an ordinance that has been in place since October 2010, implemented quickly so that Switzerland could comply with an OECD deadline to observe its standards. The new law, Bern announced earlier, “assumes the basic features of the provisions of the ordinance. It contains the principle that administrative assistance will be provided exclusively upon request in individual cases. Switzerland will not provide any administrative assistance in the case of requests based on stolen data. Unlike the ordinance, which covers only administrative assistance in accordance with double taxation agreements, the Act also governs administrative assistance based on other agreements which make provision for the exchange of information relating to tax matters, for example the agreement on the taxation of savings income with the EU. The appeal procedure is to be streamlined and the deadlines shortened.”
- Tougher due diligence requirements for banks to more effectively prevent them from accepting untaxed assets; foreign clients will be required “to make a declaration on the fulfillment of their tax obligations”.
Switzerland manages the largest amount of private offshore funds in the world, 27 percent. The Swiss argue their share is more the result of financial management skills than banking secrecy and the new government strategy is banking on this. The Swiss have nevertheless found it hard to shake off the old cliche that the country is a tax haven (according to OECD definitions it is not, although Tax Justice Network views it differently), in a world where wealth management is rapidly changing.
Boston Consulting publishes an annual report on worldwide private assets under management and in May 2012 it noted that in the previous year these assets had grown by 8 percent to a record $121.8 trillion. It issued a press release noting that:
“‘Offshore private banking remains a tumultuous part of the business,’ said Anna Zakrzewski, a BCG principal and a coauthor of the report. ‘The relative importance of offshore centers is changing rapidly. Some are benefiting from continued asset growth, while others are suffering large asset outflows, with wealth being repatriated to onshore banks, transferred to other offshore centers, redirected into nonfinancial investments, or simply spent at a faster rate.’
“For most clients, however, the core value proposition of offshore banking remains, Zakrzewski said. ‘Offshore wealth managers offer a sense of stability and security that these clients cannot find in their home countries. Other clients value the expertise or access to certain investments provided by offshore private banks. To continue to grow, offshore wealth managers will need to adapt to the changes imposed by the push for greater transparency while accentuating their strengths in areas that remain extremely relevant to clients around the world.’”
Switzerland’s announcement comes at a time when media have been speculating whether the country and the US are reaching an agreement over a fine a group of 11 Swiss banks would pay, linked to US accusations they helped American citizens and residents hide money offshore in an effort to evade taxes. (Ed. note: The announcement was covered by Business Week/Bloomberg, Reuters, Wall St Journal)
The strategy outline was welcomed Wednesday by the Swiss Bankers Association, which notes that “the SBA has been working on risk-based codes of conduct that impose on banks due diligence measures, in a similar way to the well-established Swiss approach to combating money laundering.” The group cautions, however, some aspects could backfire. “The codes of conduct will stipulate a risk-based approach whereby it makes sense for banks to obtain a declaration from clients about their tax situation (“self declaration”) if they have indications that the clients have not complied with their tax obligations. However, the SBA rejects a systematic duty of self-declaration as it has no credibility abroad, is unlikely to become an international standard, does not provide a solution for assets already deposed in Switzerland and casts suspicion over all clients.”
The group also argues that “it is important that in Switzerland not only banks but also all financial intermediaries be required to implement these new provisions. In addition, Switzerland must make every effort to ensure that other financial centres also resolutely commit themselves to tax compliance and take appropriate measures involving locally based financial intermediaries.”
Friday is the last day to change your aging French francs for euros
Old French francs: last day to exchange them for euros is 17 February 2011
GENEVA, SWITZERLAND – Exactly 10 years ago the French franc was put to rest as France’s currency, and today is the last day any of those old bills can be exchanged for euros at banks in France. The government has been calling on citizens to come in early, and not wait for the final day, but a spokesperson for the Bank of France told news agency AFP that they were nevertheless seeing a sudden rise in people bringing in old bills.
Le Point reports that at the end of 2010 some 50 million bills were still in circulation, with a value of euros 602 million.
TSR points out that it’s not all old French money, since the deadline is long past for turning in coins and a number of other bills. The ones you can still exchange, until the banks close today: Pierre and Marie Curie (500 francs), Gustave Eiffel (200 francs), Cézanne (100 francs), Saint-Exupéry (50 francs) and Debussy (20 francs).
If you’re heading for the bank be sure to take legal identification with you. You’ll find the exchange rate and the list of banks on the official site, Je change mes francs. The 20 franc note is worth euros 3.02, to give you an idea.
Photo: Swiss Federal Customs Office
BASEL / GENEVA, SWITZERLAND – Lower prices across the border in France thanks to the high Swiss franc don’t always mean the Swiss lose out: the Swiss Customs Office says that in 2011 its revenues rose thanks to import declarations, from CHF28.7 million to CHF39.8m.
Imported border goods remain nevertheless a small part of customs revenues, only 0.2 percent of the CHF23.47 billion, which is more than one-third of all Swiss federal revenues.
The 30 percent increase in declared goods was accompanied by revenues from those who couldn’t resist the temptation to buy more without declaring the goods, as the number of contraband merchandise cases rose by 36 percent.
Customs offices and border guards say that while contraband goods are brought in by amateurs and professionals, they focused on the second group last year and uncovered 5,800 cases, some 400 more than in 2010.
They delivered 2,960 people to the police and discovered 1,477 falsified or illegally used documents and 1,308 illegal arms.
They seized, among other drugs, 208 litres of KO drops, more than triple the quantity found in 2010 and equal to 100,000 doses. It has no smell or taste and is “regularly used in kidnappings and sexual crimes”, notes the federal office.
Seized in Bardonnex, 2011
The most popularly imported illegal drop was Viagra-type erection drugs and the most popular source country was India.
Foods remain high on the list of illegal imports: fruits and vegetables (818 tons), cereal for human consumption (41 T), spirits (32 T), Wine (24 T), Meat and meat products (28.5 T), Olive and other consumable oils (20 T), Milk and cheese products (3 T).
GENEVA, SWITZERLAND – Japan has announced its first trade deficit since 1980, Y2.49tn ($32bn), with Prime Minister Yoshihiko Noda saying it will take until 2014 for a turn-around. Analysts, according to the financial press, are gloomier about Japan’s short- to mid-term prospects for avoiding a current account surplus. The savings rate in the country has been falling, fuel costs have risen sharply in the past year and the trade balance has been hurt as well by a combination of the broader impact of the major earthquake at the start of 2011, floods in Thailand which have pushed down exports, and a trade deficit with China that is five times higher than in 2010.
Japan has historically had large trade surpluses.
Links to other sites: Bloomberg, Financial Times, RTE
Mitt Romney (photo, Gage Skidmore / Wikipedia)
GENEVA, SWITZERLAND – US Presidential candidate Mitt Romney, whose estimated net worth is $190-250 million, has made public more than 500 pages of tax records after losing the South Carolina primary over the weekend to Newt Gingrich, who accused the former financial investment manager of not coming clean about his wealth. It is the first-ever disclosure by Romney, even though he earlier served as governor of Massachusetts.
Media reaction today in the US to details of the Romney fortune and the couple’s tax record mentions financial accounts in the Cayman Islands and in Switzerland, but focuses on the fact that he is one of the wealthiest candidates ever for the top US office. The Caucas, a New York Times blog, notes that “The Wall Street Journal and financial wire services showed a vast array of investments from a recently closed Swiss Bank account to holdings in Bermuda to the Cayman Islands, all underscoring the breadth and depth of his wealth.”
The disclosure and debate over it are part of growing evidence that a hot presidential campaign topic will be fiscal reform and the disparity between what the rich and other people pay in taxes.
State of the Union address Tuesday night may focus on economic inequality
President Barack Obama will give his State of the Union speech tonight and, according to CBS News, “Economic inequality is emerging as a central theme in the battle for the White House, with Obama trying to harness populist anger at Wall Street and corporations against a backdrop of chronically high unemployment. He plans to call for higher taxes on millionaires in his State of the Union address to Congress on Tuesday night, embracing an idea advanced by billionaire investor Warren Buffett and Occupy Wall Street protesters.”
Media references to the Swiss bank account are generally limited to implying that it is an indication of his wealth and noting that it was closed at the suggestion of political advisors. CBS News reports that “in a conference call with reporters, Brad Malt, Romney’s trustee, called the Swiss account ‘fully legal, fully disclosed’ but said it was closed in early 2010. He added: ‘The income earned on that account is taxed just as any other domestic or other bank account owned by the blind trust.’”
The news channel goes on to note that “pages and pages are devoted to foreign entities in which Romney is invested. Many are located in places like Luxembourg, Ireland and the Cayman Islands, all famous tax havens. None shows much income.”
Reuters, in an article widely picked up, writes 24 January, that “the emerging picture was of a man of great means who contributes mightily to charity. The documents showed he and his wife contributed $7 million in charity over the two years, much of it going to his Mormon church. That represents more than 15 percent of the Romneys’ income for those years”, more than the tax rate paid by the Romneys, with an
Proposal would allow bank account numbers, balances, capital transactions to be shared in anti-terrorism, money laundering cases
Seeking the full story on money laundering: new Swiss banking secrecy rules may lie ahead
BERN, SWITZERLAND – Swiss banking secrecy could be in for its first serious change, in addition to the pending double taxation treaty with the US.
Wednesday 18 January the Federal Council put out for consultation an amendment to the Money Laundering Law that would allow Swiss authorities to share, with certain foreign government agencies, bank account numbers, information on capital transactions and bank account balances. The information could be supplied if requested as part of money laundering and anti-terrorism investigations.
Today’s proposed legislative changes will now be sent out for consultation until the end of April, at which point the pre-project proposal will be adapted in line with remarks submitted, before it goes through further legislative hoops.
The Swiss-US treaty, which has not yet been approved by parliament, would allow the US to ask for bank data without first providing a name and account number, in a very limited number of cases. It has been reported by US media as a breach in the wall of Swiss banking secrecy, but in Switzerland it is negatively viewed by some politicians as simply a concession to one large nation.
The new proposal would have a far broader impact, affecting working relations with financial investigators in 126 other countries. Support for money laundering laws has, in contrast, been stronger in Switzerland, with the government pushing in recent years to uncover illegal assets of political leaders from elsewhere. As a result, “Switzerland has returned about CHF 1.7 billion to their countries of origin, which is more than any other financial center of a comparable size”, Bern notes, but exchanges with other governments have been hampered by Swiss banking secrecy laws.
Swiss agency will also be allowed to request more information
The changes would also work in the other direction, giving MROS (Money Laundering Reporting Office Switzerland), the agency through which such requests are made, the power to obtain more information from its counterparts abroad than it can today, given the constraints of Swiss banking secrecy laws.
In future MROS would also be able to demand financial details from third parties that have not themselves announced suspect financial activity, not possible today because of banking secrecy constraints. The government argues, in a statement on the proposed changes, that such occasional requests would improve the quality of the information Switzerland can supply other governments as well as information on suspect cases generated here.
The news was announced in the context of efforts by the federal government to reinforce efforts to fight money laundering and to strengthen the Swiss financial industry. Swiss bankers have been under pressure from other governments, in particular to provide information to tax authorities.
Credit Suissse and 10 other banks are currently under investigation by the US Department of Justice on suspicion of helping wealthy Americans avoid taxes.
The proposal is the result of MROS being the only agency among the Egmont group of Financial Intelligence Units (FIUs) from 127 countries that does not share financial information. The Egmont group in July 2011 decided that MROS’s refusal to share information, on the grounds it contravened Swiss law, runs against the group;s principles, and it threatened to suspend Switzerland unless it showed, within a year, that it is undertaking the steps necessary to change the law.
Bank Council says “taking measures is in order”: tighter rules immediately for board members and greater future transparency
Swiss National Bank vice-chairman Thomas Jordan, chairman Philipp Hildebrand and member of the Enlarged Board, Jean-Pierre Danthine
ZURICH, SWITZERLAND – The supervisory body for the Swiss National Bank (SNB) announced after a special meeting Saturday 7 January that it is tightening measures governing board members’ personal financial transactions, effective immediately, hiring an outside body to carry out a review with an eye to longer term measures. The Bank Council has also “decided that all bank transactions effected by members of the Enlarged Governing Board between 1 January 2009 and 31 December 2011 will be reviewed by external auditors (preferably KPMG or Ernst & Young).”
The extraordinary measures follow several days of headlines where SNB Chairman Philipp Hildebrand’s family’s foreign exchange transactions in late 2011 came under close scrutiny from Swiss but also foreign media and political parties, culminating in a press conference Thursday with Hildebrand recapping events and taking questions from dozens of journalists.
At issue: Hildebrand’s wife, an experienced foreign exchange trader who now runs a Zurich art gallery, bought and sold dollars and made a sizeable profit in October 2011, close to the time when her husband was capping the Swiss franc/euro rate, and questions were raised about whether Hildebrand personally benefited from inside information. The Bank Council’s internal review as well as an independent one done by PricewaterhouseCoopers (PwC) showed no wrongdoing.
Swiss media gave his performance and explanations at the press conference mixed reviews, with French language media more generous than some in German-speaking areas. The right-wing UDC People’s Party continues to call for his resignation, but their own role in the scandal remains unclear. Hildebrand’s personal banking data was illegally shared by a Sarasin Bank IT employee with a lawyer who turned it over to Christoph Blocher, former member of the government and UDC party leader. Blocher has remained silent on the affair.
The full text of the press release Saturday from the Bank Council:
“At its meeting of 7 January 2012, the Bank Council of the Swiss National Bank (SNB) addressed issues concerning corporate governance and own-account transactions involving financial instruments. It became evident that, given the events of the past few days and developments in financial markets, as well as with a view to improving transparency, taking measures is in order.
“The Bank Council has therefore adopted the following resolutions:
With the support of external specialists, a comprehensive revision of the regulations and directives on own-account transactions involving financial instruments by members of the Enlarged Governing Board will be undertaken. The corresponding draft regulations and the revised directives for SNB employees are to be submitted to the Bank Council as soon as possible.“Furthermore, the Bank Council has decided that all bank transactions effected by members of the Enlarged Governing Board between 1 January 2009 and 31 December 2011 will be reviewed by external auditors (preferably KPMG or Ernst & Young).
“Until such time as the regulations and directives have been revised, members of the Enlarged Governing Board as well as staff members with access to privileged information must first get approval from the SNB’s Chief Compliance Officer for foreign exchange transactions which exceed CHF 20,000. The Audit Committee of the Bank Council will be informed periodically of such instances.”
ZURICH, SWITZERLAND – The Zurich Cantonal Bank (ZKB) is closing all accounts for US domiciled clients, citing growing pressure from the US, according to Tages-Anzeiger 5 January: “The pressure from the United States on foreign banks makes the risks too high.”
Urs Ackermann, ZKB spokesman told the Swiss news agency, ATS, that the measure also affects Swiss expats living in the US.
The bank alerted the clients concerned 23 December, giving them 60 days to transfer their funds to other banks.
The ZKB and other Swiss banks have been accused by US tax authorities of helping American clients hide their taxable assets. The bank had already closed down securities portfolios of US-based clients in 2009.
Related stories:
Swiss bank Wegelin braced for “expected” fight with US, GenevaLunch 5 January
Philipp Hildebrand, Swiss central bank boss, meets journalists, GenevaLunch, 5 January (dollar currency deal affair)
ZURICH, SWITZERLAND – The Swiss National Bank Wednesday took the unusual step of publishing its internal regulations governing the private financial activities of its senior management, as part of efforts to clear chairman Philipp Hildebrand’s name in the face of accusations he profited from his position.
By comparison, other central banks tend to make public their regulations concerning investment and disclosure for senior management.
The SNB also published the independent report from an investigation it had asked PricewaterhouseCoopers to make into Hildebrand’s transactions, which the banker’s wife, a former currency trader, said were her own.
Documents were taken from Bank Sarasin and given to a lawyer who is close to the right-wing UDC People’s Party that purportedly showed Hildebrand and his wife making a CHF60,000-plus profit on currency transactions.
Hildebrand is scheduled to meet the press Thursday in Zurich, to clarify the situation.
SNB internal regulations (German and French) and the PwC report (Ger)
Bloomberg/Business Week article, including EU and US Federal Reserve regulations on management private investment rules
Philipp Hildebrand, chairman, Swiss National Bank
ZURICH, SWITZERLAND – A computer system employee of Bank Sarasin turned himself into police 1 January, it was revealed late Tuesday, after sharing documents linked to currency transactions made by the family of Philipp Hildebrand, chairman of the Swiss National Bank.
Swiss data protection and privacy laws make it illegal to share such information.
The documents were given to an attorney who is close to the UDC, Switzerland’s right-wing People’s Party. The employee, who was promptly fired by the bank says the lawyer made an appointment to meet Christoph Blocher 11 November. Blocher is a former leader of the UDC who was a member of the Swiss government until 2007.
Swiss media have been speculating about the role of Blocher in the leak to media that Hildebrand’s wife, a former currency trader who owns a gallery in Zurich, had made more than CHF60,000 in profit buying and selling one million dollars around the time that her husband was capping the Swiss franc. She spoke about the transaction for the first time on television Tuesday, saying that as a former currency trader she saw the “ridiculously” low level of the euro as an opportunity and that the day after she purchased dollars she informed the Swiss National Bank of the transaction, made in her own name, to ensure transparency.
TSR reports that not only did the Bank Council, the governing body that oversees Swiss National Bank activity, investigate and clear Hildebrand of suspicion of illegally benefiting personally from his position, but it asked PriceWaterhouseCoopers to carry out an independent investigation, which also cleared Hildebrand.
Christoph Blocher told Swiss German television Tuesday evening that he intends to remain silent for now.
Background story, GenevaLunch 3 January
Bank Sarasin’s public statement in full
ZURICH, SWITZERLAND – Swiss National Bank President Philipp Hildebrand is getting heat from Swiss media over the profitable sale of dollars by his wife Kashya Hildebrand in October. It’s unclear who the source is for the figures, but both NZZ and Blick have reported that she made more than CHF60,000 in profit after buying and later selling $1 million.
Christophe Darbellay, president of the federal government’s Commission for Economy and Taxation, said that an internal bank council investigation has left “too many question marks”. At issue is the question of whether or not it is legal for SNB employees and their family members to make trades; the bank’s regulations are not a matter of public record.
The SNB president announced 6 September that the central bank was capping the over-valued franc, and it promptly fell against the dollar. Swiss media have been asking if the bank president’s wife was privy to inside information, which the bank’s governing council denies.
The bank has confirmed, according to Reuters, that “Kashya Hildebrand, a former currency trader who now runs an art gallery in Zurich, bought an unspecified amount of US dollars for herself and her daughter” but declared that an internal investigation turned up no wrongdoing.
Hildebrand has a good reputation in Switzerland although right-wing former UDC party leader Christoph Blocher recently criticized him strongly, and there has been media speculation that Blocher may in some way be linked to the information about Ms Hildebrand. although there appears to be no proof of this. Blocher has refused to comment on the matter.
GENEVA, SWITZERLAND – Italy’s new prime minister, Mario Monti, has told the country’s parliament, through his minister for relations with that body, that Italy should not seek a double taxation agreement with Switzerland along the lines of those with Germany and the UK.
But the opposition then accused him of not being open to negotiations with Switzerland, which has expressed its willingness to seek an agreement, and of not going after the CHF14-15 billion such an agreement could bring into the Italian government coffers.
The European Commission has said it is opposed to such agreements, which allow Switzerland to respect its banking secrecy laws and partner governments to collect tax revenues for their citizens holding Swiss bank accounts. The UK and German agreements call for Swiss financial institutions to collect withholding taxes on transactions, money that is paid to the foreign treasuries. Account holders then have the choice of coming forward and announcing their holdings in order to recuperate the tax, or remaining silent and forfeiting the tax.
Photo: Shangrila Farms, Yunnan Province, China
BERN, SWITZERLAND – “Switzerland’s free trade agreement negotiations with China are in a rather early stage but they are well underway” following the third round of talks between the two countries, Swiss Ambassador and Delegate for Trade Agreements Christian Etter has told GenevaLunch.
Switzerland, which has a trade surplus with China despite the former’s small size, has taken a European lead in working out a free trade agreement (FTA) with Asia’s giant economy since the two signed a Memorandum of Understanding 28 January 2011, says Swiss President Micheline Calmy-Rey.
“It shows we’re not afraid,” she said, smiling, at a press conference in Geneva 28 November. She was treating it lightly, but Switzerland is keen to keep the negotiations moving, particularly in the wake of a slowdown in negotiations between China and Iceland and China and Norway.
Both sides have said they would like the talks to move swiftly.
EU’s Almunia says stable trade framework is the way forward
The comments come as the European Union’s anti-trust boss called for less bickering and a better trade framework between the EU and China, at the EU-China Forum held in Brussels this week, organized by the Friends of Europe. Joaquın Almunia is quoted by Dow-Jones 29 November as saying that “everything linked with intellectual property rights, innovation, know-how, is not well-solved in our relations, we are discussing with our Chinese partners but I don’t find we have a stable framework to benefit from both sides of our common understanding.” He added that “playing this same kind of game means these pressures, these intensities will increase.”
Swiss-China trade picks up while Swiss-EU trade slows
Switzerland is China’s ninth largest trading partner in Europe, with the smaller country having a trade surplus for 2011 of CHF2.13 billion by the end of October. China is Switzerland’s largest trading partner in Asia. During the first 10 months of the year Switzerland’s exports to China grew by 26.2 percent, while imports from China slipped by 3.3 percent.
China is Europe’s largest trading partner and its trade surplus with Europe is €160-€180 billion in 2011, according to the Wall St Journal.
Trade has been stagnant between the EU and Switzerland during the first 10 months of the year, with exports to the EU down 0.5 percent and imports up 3.1 percent.
Iceland was the first European country to start FTA negotiations with China but its talks have cooled down, with Iceland’s application to join the European Union. Negotiations began formally in July 2010; EU membership would exclude implementing a separate FTA with China.
And talks with Norway have slowed down since China expressed its displeasure over the 2010 Nobel Peace Prize being awarded to Chinese dissident Liu Xiaobo.
Third round of negotiations covered hefty list of topics
The latest round of talks in the free trade negotiations between Switzerland and China took place in Montreux 8-10 November. The talks were launched in Davos in January, with talks held once in Bern and once in Beijing.
The two teams in Montreux held expert level discussions and exchanged information on respective regulatory systems and FTA-practices covering several areas: trade in goods, trade in services, rules of origin, customs procedures and trade facilitation, technical barriers to trade (TBT) and sanitary and phytosanitary measures (SPS), trade remedies, intellectual property rights, competition and dispute settlement.
The heads of of the two delegations and experts discussed investment promotion, cooperation on trade and sustainable development, and cooperation on government procurement, and agreed on follow-up work in all areas.
The fourth round of negotiations are expected to take place in China in early 2012.
Background
- World Trade Organization, most recent trade policy review for China, June 2010
- EU / China Partnership and Cooperation Agreement
The 1 December window on the 2010 Sustainable Development calendar gave us a peek at the world behind our chocolate products - two more days until you can open the new 2011 calendar windows!
BERN, SWITZERLAND – One of Switzerland’s quirky offerings is back, the seasonal Swiss online sustainable development Advent calendar where you can have a lesson a day and take part in daily quizzes to try to win prizes, in the interest of boosting sustainability.
A bonus is the list of gift ideas to spark your imagination for suitable gifts. The project, started in 2000, is now available in five languages, to encourage broader participation worldwide.
The calendar is put together by a surprisingly rich mix of researchers, companies, educational groups, federal authorities, environmental organizations and others who are joining forces for the second year to create the online calendar (see list of partners).
For those who did not grow up with Advent calendars, the idea is that for the four weeks of Advent that run up to Christmas, you open a window a day, usually to find an interesting little gift, either visual or physical.
The windows work with themes such as green technology, especially ICT and protecting nature. The sources of information for the windows come from firms, non-governmental organizations and the Swiss government, one-third each. The windows are designed to show “affordable, pleasant or simply surprising solutions” according to the federal energy office which, with the Swiss sustainable development network, Öbu, is a major sponsor.
Examples of corporate solutions include: travel company Kuoni shows the first sustainable development certifiied agency trips; Coop supermarket chain shows how certified palm oil can be part of our consumer products; Ricola, the herbal sweets maker shows us attractive homes for bees so we can reduce their mortality rate, while canton Geneva and the town of Yverdon-les-bains show us why it makes sense to recycle the cartons used for many of our drinks.
Swiss president says concern over legality of UK, German deals is EC’s “internal” problem
Swiss President Micheline Calmy-Rey in Geneva 28 November
GENEVA, SWITZERLAND – Switzerland is looking for an agreement with the US that will draw a line on the past, where banks and US tax fraud or evasion is concerned, Swiss President Micheline Calmy-Rey said Monday 28 November. It should include an agreed method for the US to collect tax money in the future while Swiss banking secrecy laws are respected.
“We don’t want to be a place for people who are trying to evade taxes. But we want to sort out past issues, once and for all, and put some order into [things],” she said, referring to ongoing problems between Swiss banks and the US tax arm, the IRS.
“And in the same agreement, we want to deal with the future,” for example through the kind of withholding tax agreement Switzerland struck in August with German and the UK.
“That, in essence, is our position, and it’s the same as it was with the UK and Germany.”
Her remarks were made at a press conference in Geneva Monday afternoon, 28 November where the president was presenting an overview of International Geneva, and its growth in size and importance in the past decade. She earlier attended the opening of the International Conference of the Red Cross and Red Crescent in Geneva.
EU tax commissioner suggests to UK paper the EU might sue Britain
Switzerland, under the UK and German agreements, which have yet to be ratified, is to collect withholding taxes on transactions by financial institutions, then turn over the money to the other countries without divulging the name of the account owners.
But European Union Tax Commissioner Algirdas Semeta told the Financial Times in an interview published Monday morning that he believes Britain and Germany went too far in signing their own bilateral tax agreements with Switzerland. The FT writes that:
“Brussels is threatening to sue Britain unless ministers significantly alter a landmark tax deal with Switzerland, in a dispute that will cast doubt over the £4bn to £7bn of expected proceeds for the Treasury. European Commission lawyers concluded that the bilateral deal, which recovers billions of unpaid taxes in return for protecting the prized secrecy of the Swiss banking system, is in breach of European Union laws that are tougher on tax evasion.”
Micheline Calmy-Rey, Swiss president
Calmy-Rey says this is an internal matter for the European Union, and it’s not for Switzerland to comment on who is competent in this area, the EU or its member states.
Switzerland and the European Union have a tax agreement covering “taxation of savings income in the form of interest payments”, signed in 2004 and revised in 2008 and again in January of this year.
The FT reports indicates that the EU’s pressure on Britain and Germany to renegotiate their deals with Switzerland is causing some friction.
Whether or not Switzerland would be open to new negotiations remains unclear, although the Swiss Bankers Association CEO Claude-Alain Margelisch said last week that “our view is that there can be no renegotiation” and the organization’s priority is to see that all parties are convinced that the agreements are true and fair compromises.
US talks could create new agreement, but form is still unclear
The US-Swiss talks are widely expected to be completed within weeks if not days, but the ultimate form an agreement might take is not yet clear, Mario Tuor, spokesperson for the Swiss Federal Tax Office told GenevaLunch Monday evening. The two countries have a treaty dating back to 1996 that covers tax fraud, still in place, and a new treaty covering tax evasion, which goes before the Swiss parliament in December 2011.
Tuor repeated Calmy-Rey’s assertion that Switzerland also wants an agreement which covers the banks not currently being investigated by the US Justice Department for helping Americans evade US taxes. “The form [it would take] is not yet clear. But it is clear now that we will not need a parliamentary agreement,” which a treaty would require. “We won’t need an agreement that calls for a treaty because it will be based on existing law.”
Switzerland and the US signed a treaty in 2009 that covered an American request for assistance with UBS 4,450 bank accounts, whose owners had not been identified, thus putting the demand outside the existing legal framework.
The talks are raising questions among many Americans who live overseas and who are grappling with the implications for them of tax reporting changes that were designed to prevent fraud by wealthy Americans who live in the US and have offshore accounts.
In the sights of the IRS, but part of a much bigger picture
BERN, SWITZERLAND – Americans who create offshore shadow companies or foundations, clearly to avoid taxes and with the active help of a Swiss bank, could see their financial information shared with the IRS even if the US tax authority cannot provide their names, if parliament accepts recommendations of the upper house foreign affairs commission.
The commission agreed Thursday 10 November, in a 7 to 3 vote, to an amendment to the new double taxation treaty with the US, which parliament will consider in December. The amendment would allow group requests to be made: bank data could be given to US authorities without the US first providing a name and account number, in a very limited number of cases.
US, Swiss seek global bank solution, sooner rather than later
Meanwhile, the investigation into 11 Swiss banks by the US Justice Department continues. The US and Switzerland have been in talks for some time to find what Mario Tuor, spokesperson for the Swiss Tax Office calls “a global solution for all banks.”
There is no timeframe for finding such a solution, an official who asked not to be named has told GenevaLunch, but both sides say they want a solution sooner rather than later.
Switzerland has “made no offer to the US” over 11 banks
Tuor told GenevaLunch that Switzerland has made no offer for a lump sum payment, contrary to a Reuters “exclusive” story 3 November that mentioned a multibillion dollar settlement. Another Reuters reporter later quoted Tuor as saying Switzerland has not made an offer as part of the talks. He clarified to GenevaLunch Friday that no offer has been made by the Swiss, period.
In fact, says one official,who concurs, saying Switzerland has not made an offer, some people close to the case have discussed figures but these are far smaller than the several billion that Bloomberg and later, Reuters, mention.
The Reuters reporter in New York has qualified the Credit Suisse investigation by the IRS as part of a showdown between the two governments—a statement at odds with the Swiss government’s insistence on including in the new treatment the clarification that group requests can be made under some circumstances. “The move by the two Swiss banks to disclose American client names and account information is the latest event in a showdown between Switzerland and the United States over the withering tradition of Swiss bank secrecy,” according to reporter Lynnley Browning, who covers accounting and tax stories from the US for Reuters.
Browning repeated today, as news, information she says she gleaned a week ago from unnamed US “sources briefed on the matter”—despite it later being flatly denied by the Swiss government to another Reuters reporter in Zurich. Lynnley Browning, who has written articles for the New York Times in the past, frequently pitting the US against Switzerland as adversaries, writes 9 November that:
“Switzerland is trying to craft a deal with the United States that would cover its entire banking industry of some 355 banks. Switzerland had wanted a deal that covered accounts dating back to early 2009, when UBS AG , Switzerland’s largest bank, averted indictment and reached a $780 million deferred-prosecution arrangement with US officials. But the two letters from Credit Suisse and Clariden Leu suggest that US authorities are unwilling to accept a deal that would start with 2009 rather than the January 2002 date cited in the letters.”
Credit Suisse letters sent to clients at gov’t behest
Credit Suisse and its subsidiary bank Clariden Leu, this week sent out letters to some clients warning that their names will be turned over to the IRS, with Swiss government support, as a result of the investigations. Bloomberg reports that
“The IRS sought data for accounts owned through domiciliary companies in which clients are the beneficial owners, according to the letter. The Swiss Federal Tax Administration issued an ‘immediately executable’ order to the Zurich-based bank, which has no right to appeal, according to the letter. Taxpayers can consent to the SFTA handing over their account data to the IRS, or they can use the Swiss legal system to appeal a ruling by the SFTA that their account must be given to the IRS, according to the letter.
“‘Please be advised that Credit Suisse is not able to provide any information on whether or not information with respect to a specific account will be provided to the IRS,’ according to the letter, signed by managing directors Michel Ruffieux and Stephan Gussmann.”
The banks’ moves are being reported by some media outside Switzerland as a breakdown in Swiss bank secrecy but the information in the letters doesn’t reflect a change in practice which is based on the old 1996 tax treaty that allowed some group requests; the US reportedly has gleaned enough information from other cases to find patterns of fraud at 11 Swiss banks.
Catching major tax evaders in the future
Some US media are also incorrectly reporting that the amendment to the new treaty provides for an “automated” process. The treaty would simply clarify that some group requests could be accepted by Switzerland, a feature of the old 1996 treaty. The US is the only country to have such an agreement with Switzerland, according to Swiss officials.
“Tax fraud and the like” includes some cases of tax evasion
A significant change in the new treaty is that it will allow the US to request assistance in some cases of tax evasion and not just fraud.
The Federal Justice Department published a statement 31 March 2010 about the “amending protocol” of the new treaty that parliament will consider in December, noting that it “permits Switzerland to provide treaty assistance in cases not only of tax fraud, but also of continued and serious tax evasion.”
The commission included, in August, the preamble (see text) requested by the Federal Council that explicitly authorizes for the first time judicial assistance in a limited number of cases where American requests do not include a name and address. But there is a clear rider: the requests must be “proportionate” and “practicable”.
In other words, Bern continues to insist, fishing expeditions or mass requests for information are specifically ruled out. Switzerland remains firmly opposed to this, citing Swiss banking laws that protect privacy.
The amendment notes that the US must provide evidence of a “pattern of flagrant” behaviour and of a very serious effort either to defraud or to evade taxes involving “large sums of money”.
Amended treaty doesn’t provide catalog of suspicious behaviours
A minority of the foreign affairs commission called for a catalog of catalog to be drawn up that specifies what behaviour constitutes a pattern and is therefore considered suspicious and what is not, but the commission in the end voted against this. Le Temps in an article Friday morning points out that this could create legal problems in the future.
The amendment would apply only to the agreement with the US and not to other double taxation agreements, the commission’s chairman said Thursday evening.
The next step is for parliament to consider the commission’s recommendation, which calls for the treaty to be approved, with the amendment included.
The commission also recommended that parliament approve nine other double-taxation agreements as they stand, including those with France and the UK
Swiss federal government timeline of the UBS case and the double taxation treaty with the US
Swiss franc weakens slightly but not enough for the SNB
ZURICH, SWITZERLAND – The Swiss franc weakened in trading Monday, to $.90 after earlier trading at $.88. It was also weaker against the euro, at 1.24, but with the day’s low at 1.22.
Philipp Hildebrand, Swiss National Bank chairman, told Swiss German papers over the weekend that the bank will continue to push the franc down, seeing it as still very over-valued.
Monday’s news that the consumer price index had dipped slightly, but for the first time in two years, will put further pressure on the central bank to get the franc down to avoid recession.
Chinese tourists overtake Italians, catching up with French, British
Chinese tourists on Mt Saentis 29 October, next to Switzerland's first mountain peak weather station, commissioned in 1882: on a clear day six countries are visible from this point
BERN, SWITZERLAND – The Swiss franc continues to have a strong impact on European and US visitors to Switzerland, with the number of overnight stays by foreigners in September down 6.8 percent compared to the same month a year earlier.
Foreigners accounted for a little more than half of the industry’s 3.3 million overnight stays in September.
The overall figure for the year to date is down 2 percent, but in September overnight stays fell 3.4 percent.
The decline in European stays continued, with Bern attributing this largely to the over-valued Swiss franc against sterling and the euro. Visits by foreigners were down 6 percent, but European visitors’ stays fell by 11 percent.
German tourist numbers were down 13 percent, British 13 percent, Dutch 12 and Italian 11 percent. US visitors are down 9.4 percent, although the number of overnight stays by Canadians rose
Chinese tourists to Switzerland: rapid increase as Alps tug Asians
Mt Saentis 30 October: a popular destination for German tourists, is attracting Chiense visitors
Asian numbers and in particular overnight stays by Chinese tourists continue to rise, with a 12 percent overall increase that includes a 43 percent increase by Chinese visitors, some 20,000 overnight stays. For the year to date, Chinese tourists show a 58.6 percent increase.
Germany remains by far Switzerland’s largest tourist client country, with some 470,000 overnights to date in September. The US was second with 172,000, Britain third with 152,000, France fourth with 100,000 – and then the surprise of China, with 67,000 overtaking Italy, with 65,000.
Wanted: British skiers, snowboarders, holiday fans and winter hikers
The British figures are likely to cause particular concern, with the crucial ski season coming up. Swiss statistics show 1.43 million overnights from January to the end of September, and the fourth quarter tends to be low, but the industry is holding its breath looking at winter ski season reservations.
British statistics register “visits” by its citizens abroad rather than overnight stays, and in 2010 the number of visits was down to 896,000 from a 2008 figure of 1.16 million. The first quarter of the year, with the ski season, saw 294,000 British visitors in 2011, compared to 350,000 a year earlier.
British tourists travelled again in the second quarter of 2011, but with the weakening pound, travel increased to North America, remained stable in the European Union and dropped to countries outside the EU, which includes Switzerland. Travel outside the EU during April to the end of June was at a level last seen in 2009 and before that, iln 2005.
LAUSANNE, SWITZERLAND – Peugeot-Citroën Thursday became the 11th major firm to join the Innovation Square on the EPFL campus, the first company from the car industry to bring in a large research and development budget, according to the universiy. The square opened in August 2010.
The group said in a press release 3 November that “The mission of this innovative structure is to foster a long-term vision for PSA Peugeot Citroën’s products and services.” The new unit is called StellaLab@EPFL.
The polytechnic made world headlines 28 September when it announced that new research with Nissan is studying the brain-computer interface and looking at the option of a computer-piloted car. Then 28 October it announced that, working with a French company, it had solved a major problem for compressed air cars by reducing charging time.
“EPFL conducts a great deal of research that is of interest to the auto industry, in a wide range of different fields,” it says in a 3 November press release. “For example, the Materials Sciences and Engineering Institute works to create light, sturdy composites; several robotics-oriented laboratories are designing and producing all sorts of mechanisms to help with driving and move toward ever-increasing comfort and safety for users and their environment; and there are a large number of projects that aim to replace fossil fuels in the transportation systems of the future, both by storing energy in various forms (new electric batteries, hydrogen, and even compressed air) and by using it with greater efficiency.”
